AMC paper jumps on default downgrade; Ardagh pressured; markets shake off Fed order

By Cristal Cody

Tupelo, Miss., Feb. 1 – AMC Entertainment Holdings, Inc. topped the tape on Thursday in the distressed secondary market after S&P Global Ratings dropped it to selective default.

The company’s bonds climbed about 1½ points to over 2½ points on over $18 million of trading by the end of the session.

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/D) led the rally and went out over 2½ points higher.

Meanwhile, Ardagh Group SA’s paper has been among active distressed names with the paper shedding around 4 points in the last two sessions, sources said.

ARD Finance SA’s 6½% subordinated notes due 2027 (Caa3/CCC+) dropped over 2 points on Thursday.

Market tone swung higher over the session as stock indices shook off the Federal Reserve’s decision to leave rates unchanged.

“It was up, everything was,” a trader said. “The HYG was up 44 cents, junk was up 48 cents.”

The iShares iBoxx High Yield Corporate Bond ETF finished 44 cents, or 0.58%, higher at $77.54.

Stock indices ended better after sliding on Wednesday. The S&P 500 index closed up 1.25% after dropping 1.61% the previous day.

The CBOE Volatility index was down 3.28% at 13.88.

Treasury yields dropped 8 basis points to 11 bps by the close. The benchmark 10-year note yield fell 10 bps to 3.86% following a 9 bps drop in the prior session.

Market tone was weak on Wednesday after the Fed maintained the target range for the Federal Funds rate at 5¼% to 5½%.

“Chair [Jerome] Powell leaned firmly against the prospect of a March rate cut in his January post-FOMC press conference, but signaled that the committee was nearing the confidence level necessary to justify the start of the cutting cycle,” according to a BNP Paribas SA research note on Thursday. “We view the January FOMC communications as reinforcing our expectation of the first rate cut coming in May, followed by a steady cadence of cuts through year-end.”

BNP expects rate cuts of 25 bps per meeting.

AMC bonds jump

AMC’s 10% senior secured second-lien notes due 2026 (Caa3/D) climbed over 2½ points to hit 80 bid by the close on Thursday, a source said.

Volume was over $9.6 million.

AMC’s 7½% senior secured first-lien notes due 2029 (Caa1/B-) also picked up 1½ points to a quote of 66 bid on over $9 million of trading.

S&P said Wednesday it downgraded AMC to SD from CCC+ and the 10% issue to default from CCC- after the issuer completed a series of exchanges of the notes that it considers distressed and tantamount to a default.

AMC exchanged $123 million of the 10%/12% cash/PIK second-lien notes for approximately 16.7 million shares of its class A common stock during the fourth quarter.

The Leawood, Kan.-based movie theater company also repurchased $50 million of the bonds over the quarter at an average discount of around 20%.

Ardagh declines

Ardagh Group’s paper has been on the decline over the last two sessions, market sources said Thursday.

ARD Finance’s 6½% subordinated notes due 2027 (Caa3/CCC+) dropped 2 1/8 points to head out at 44½ bid and carrying a yield of over 36%.

Trading totaled $3.9 million over the session.

On Wednesday, the bonds were down more than 2 points on a 46 handle.

On Monday, Ardagh announced a 10-year renewable energy agreement in Sweden to offset its greenhouse gas emissions and earlier in January reported plans of a renewable energy solar project in California set to be completed this year.

The Luxembourg-based glass and metal packaging producer will announce fourth-quarter and full-year 2023 results on Feb. 22.

Distressed index slips

S&P U.S. High Yield Corporate Distressed Bond index one-day total returns declined midweek back into the negative space. Returns were minus 0.14% on Wednesday, down from 0.32% on Tuesday but still improved from negative 0.94% on Monday.

Month-to-date total returns ended January at minus 2.15%, much weaker than the 7.99% of distressed returns posted in January 2023.

Quarter- and year-to-date total return losses were improved on Wednesday at negative 2.15%, up from minus 2.20% on Tuesday and negative 2.33% at the week’s start.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.